Marketing is expensive. Even if we allow free access to what otherwise would be copyrighted works, that doesn't necessarily create maximum social value because it doesn't carry with it any marketing, information sharing about the material... To say that once something has been created that ex post it can be distributed freely and therefore the marginal cost is zero, that doesn't actually encompass everything because doing that would also destroy the incentive of the sole owner to engage in other activities, expensive activities, risky activities around the commercialization of that property.

To see what's wrong with this line of argument, it's helpful to remember Ed Felten's brilliant pizzaright principle: if an argument for copyright protection could apply equally to giving someone the exclusive right to sell pizzas, there's something wrong with your argument. Manne's argument clearly fails the pizzaright test:

Marketing of pizzas is expensive. Even if we allow free entry into the pizza market, that doesn't necessarily create maximum social value because the pizzas might not carry with them any marketing, information sharing about the material... To say that once a pizza has been baked it can be distributed at low cost, that doesn't actually encompass everything because doing that would also destroy the incentive of the sole owner to engage in other activities, expensive activities, risky activities around marketing and distributing pizzas.

Economic theory says that in a competitive market, the cost of a pizza, like the cost of a copyrighted work, will fall to its marginal cost. In principle, these razor-thin profit margins should, for example, mean that firms have no money left over to spend on advertising their businesses.

Of course, in the real world, a competitive market in pizzas doesn't mean pizza prices instantly fall to marginal cost. Despite the lack of pizzarights, pizza margins in the real world allow many pizza manufacturers to earn healthy profits. And as a result, pizza firms spend plenty of money on advertising.

Exactly the same point applies to copyrighted works. Shakespeare has been in the public domain for centuries. Yet I can still go to my local bookstore and find numerous competing editions of Shakespeare's classics. Some of these books are priced significantly above marginal cost. If there were a company that held the copyright to Shakespeare's works, it might engage in some "commercialization" activities that don't occur right now. And such a firm would obviously make a ton of money. But there's no reason to think these profits would reflect value added by the firm's marketing activities, rather than mere monopoly rents taken out of the pockets of consumers.

There's something deeply ironic about a libertarian effectively arguing that central planning is more efficient than competitive markets because the central planner can internalize the returns from investments in marketing and distribution. This point is true in principle, but the effect is likely to be extremely small. We wouldn't buy that argument for a minute if someone used it defend a legal monopoly in pizzas, automobiles, or tennis shoes. But some libertarians seem to find the same line of argument persuasive when applied to copyrighted works.